CHICAGO – Detroit-based Henry Ford Health System will acquire Allegiance Health in the latest in an ongoing wave of healthcare consolidations.
Jackson, Mich.-based Allegiance Health and Henry Ford announced on Nov. 10 they have signed a letter of intent for Allegiance to join Henry Ford. Pending regulatory approvals, the two hope to finalize the deal early next year.
The two systems said the combination would allow them to better serve their communities in a post-federal healthcare reform universe. The marriage allows Henry Ford to expand its market area while it will expand Allegiance's clinical services.
"Joining with Allegiance Health is an important strategic step for Henry Ford as we broaden our expertise and reach beyond southeast Michigan," said Henry Ford president Wright Lassiter, III, in a statement.
"By joining one of Michigan's premier health systems, Allegiance will be building on our ongoing commitment to providing safe, high quality care and improving community health," said Allegiance Health president Georgia Fojtasek.
Allegiance Health is a 480-bed community-owned health system in Jackson, Michigan. It struck an agreement to join the University of Michigan Health System in late 2013 but the deal fell through.
Henry Ford Health System is a five-hospital system headquartered in Detroit. Moody's Investors Service in June affirmed Henry Ford's A3 rating and revised its outlook to stable on its $670 million of debt. The outlook revision reflects the system's improved operating results in fiscal year 2014 and Moody's expectation that near-term operating margins should continue the stabilizing trajectory evidenced through the first quarter of fiscal year 2015.
In June 2014, Moody's downgraded the system one notch and assigned a negative outlook. The downgrade was attributed to declines in the system's operating performance.
Henry Ford is one of Michigan's largest providers and one of Detroit's top employers with more than 23,000 employees.
Henry Ford in 2012 was poised to merge with another Detroit-area health care giant, Beaumont Health System, in a $6.6 billion deal. But the merger was called off in March 2013, with officials citing "cultural differences."
